The Retail & Commercial Banking Blueprint
It's time to give up on Black banks and embrace Web 3
Following the Civil War, the Freedman's Bank was established in 1865 with the supposed aim of fostering financial independence among newly freed African Americans. This institution quickly became a symbol of betrayal. Flush with deposits from Black citizens eager to participate in the American dream, the bank's funds were diverted into speculative ventures. Most notably was through its entanglement with First National Bank. Henry Cooke, brother of the famous financier Jay Cooke, used the freedmen’s deposits to finance First National Bank’s speculation. Henry Cooke accepted a spot on the Freedman's Bank Board of Trustees in mid-1867. He quickly maneuvered to control the bank's powerful finance committee.
The Freedman’s Bank eventual collapse in 1874 wiped out millions in savings, leaving a legacy of mistrust that would haunt Black communities for generations. This early betrayal underscored a painful truth: Black financial aspirations were often seen as exploitable resources rather than legitimate pursuits.
The economic landscape of the post-Civil War South was deliberately rigged against Black advancement. Sharecropping, seemingly a path to self-sufficiency, became a new form of enslavement. High debt forced Black farmers to plant cotton, the only crop accepted for debt repayment, leaving them with little land or resources to grow food for their families. Cotton traders reveled in this system, as it not only maintained America's dominance in the cotton market but also produced even more cotton than before the war. The infamous Black Codes further cemented this oppression, restricting Black labor and limiting economic opportunities. This environment made the need for independent Black-owned banks even more critical, but also presented immense challenges to their survival.
Despite the daunting odds, Black communities demonstrated remarkable entrepreneurial spirit. From 1888 to 1934, one hundred and thirty-four Black banks opened across the United States. The vast majority of these were located in the South, where the majority of Black people resided. These banks were more than just financial institutions; they were symbols of hope, community hubs, and vital sources of credit for Black businesses and individuals systematically denied access to white-owned banks.
Chicago emerged as an unexpected center of Black finance during the 1920s, home to the Binga State Bank and the Douglass National Bank, the two largest Black-owned banks in the nation. These institutions, led by visionary figures like Jesse Binga and Anthony Overton, controlled nearly a third of the combined resources of all Black banks in the country at their peak in 1928. They were models of Black excellence in commercial banking.
Jesse Binga was a self-made millionaire and real estate mogul who faced relentless racism. His home was bombed seven times during the 1919 Chicago race riots, incited by the first Mayor Daley's gang, as white residents demanded he sell his property and leave the neighborhood. Despite these threats, Binga persisted, building a financial empire that served the Black community. The Great Depression proved to be a challenge however. When Binga reached out to The Chicago Clearinghouse for a short term loan from the fund he had helped build, the board rejected his request. One member of the clearinghouse referred to Binga’s bank as “a little nigger bank that does not mean anything”. It was the first closure of a member bank of the Chicago Clearinghouse in 20 years. All other banks that belonged to this clearinghouse were given aid and survived the Great Depression.
Even more tragically, Jesse Binga was unjustly imprisoned after the bank’s failure on charges of "embezzlement”. His first trial in 1932 resulted in a hung jury. Despite the initial inconclusive result, the prosecution pursued a second trial in 1933 where he was found guilty and sentenced to a harsh ten years in prison. The charge was that he had deposited the $39,000 he had raised for his second bank into a personal account. Binga defended himself against the charge by explaining that state laws did not allow capital funds for a national bank to be held in a state bank and no national bank would take the money.
The Pecora Commission Hearings (1932-1934), led by Ferdinand Pecora, were a landmark Senate investigation into the causes of the 1929 stock market crash and the subsequent financial crisis. These hearings exposed widespread misconduct, financial crimes, conflicts of interest, and dubious practices by many of Wall Street's most prominent figures. While they led to significant financial reforms (like the Glass-Steagall Act and the Securities Act of 1933), they did not result in jail time for anyone involved. According to recorded history, this made Binga the only banker in the entire country who was sent to prison for financial crime during the Great Depression.
Anthony Overton was born into slavery in Monroe, Louisiana in 1865. His family later moved to Topeka, Kansas, where he received an education, eventually earning a law degree from the University of Kansas in 1888. He even served briefly as a municipal judge. However, his true calling lay in business. Overton's entrepreneurial journey began in the late 1890s with a grocery store in Kansas City, Kansas. His keen eye for market gaps led him to establish the Overton Hygienic Manufacturing Company in 1898. This venture initially produced items like baking powder, but Overton soon recognized an underserved market: cosmetics and personal care products specifically formulated for Black women. His "High Brown Face Powder" was a groundbreaking success, becoming the first widely marketed cosmetic line for Black women.
In 1911, Overton made a strategic move to Chicago, recognizing the burgeoning Black population and the economic opportunities in the city's Bronzeville neighborhood. This move allowed his Hygienic Manufacturing Company to flourish, expanding its product line and establishing a national presence. In 1923, Anthony Overton made his foray into banking, founding Douglass National Bank in Chicago. This was a monumental achievement, as it was only the second nationally chartered Black-owned bank in the United States. Overton's rationale for establishing the bank was clear: he believed that Black money should circulate within the Black community to foster its economic growth and combat the discriminatory lending practices of white banks. By 1927, his cosmetics business alone was valued at over a million dollars further diversifying his portfolio of business interests. Douglass National Bank was able to survive until 1932 before shutting down. The Great Depression hit their customer base too hard. While his bank failed, Overton demonstrated remarkable resilience and the wisdom of diversification. Unlike Jesse Binga, who was controversially imprisoned, Overton managed to salvage key parts of his conglomerate. He kept the Overton Hygienic Manufacturing Company and The Chicago Bee afloat, continuing to operate them until his death in 1946.
The Civil Rights era brought renewed hope and a new wave of Black banking institutions. In Chicago, Independence State Bank (1964) and Seaway Bank (1965) emerged, eventually becoming the top two Black-owned banks in the nation for the next few decades. These banks played a crucial role in supporting Black communities during a time of immense social and political change. However, like their predecessors, they too faced challenges, and their stories reflect the ongoing struggle for Black economic empowerment. Both banks have since been acquired.
Today, Black-owned or operated banks continue to exist, but they are generally small and lack the scale and influence of their historical counterparts. Systemic inequalities, discriminatory lending practices, the lack of circulation of the black dollar within the community and a lack of access to capital continue to hinder their growth. Combined, the publicly traded black banks have a market cap that is ~3,000x smaller than JPMorgan alone. It’s comical if you combine the other non-black banks and look at the market size difference.
What’s not covered in this post
Real estate impact on wealth creation and banking
History of M&A for black businesses
Insurance
These will all be covered in future posts as they’re complex topics on their own.
Overview of Web 3
At its core, a blockchain is a revolutionary type of digital ledger that underpins the entire Web 3 paradigm. It's a decentralized, distributed database where transactions are recorded in "blocks" and linked together cryptographically to form a continuous "chain." Each block contains a timestamp and a hash of the previous block, making it virtually impossible to alter past records without invalidating the entire chain. This inherent immutability ensures data integrity and transparency, as all transactions are publicly viewable across the network's thousands of participating computers, or "nodes." Unlike traditional centralized databases, no single entity controls a blockchain, fostering trust through cryptographic proof and a consensus mechanism where network participants collectively validate new transactions, ensuring security and resistance to censorship.
Bitcoin (BTC) stands as the pioneering cryptocurrency, launched in 2009 by the pseudonymous Satoshi Nakamoto with the aim of creating a peer-to-peer electronic cash system. Operating on its own independent blockchain, Bitcoin's primary function is to serve as a decentralized digital currency and a robust store of value, entirely independent of government or central bank control. While Bitcoin's main blockchain prioritizes security and decentralization, its transaction speeds can be slow and fees high, especially during periods of network congestion. To address these scalability limitations, the Lightning Network emerged as a Layer 2 solution built atop Bitcoin, enabling off-chain payment channels that allow for near-instant, low-cost transactions, significantly enhancing Bitcoin's utility for everyday microtransactions by only settling the opening and closing of these channels on the main blockchain.
Ethereum (ETH), launched in 2015 by Vitalik Buterin, extends the blockchain concept beyond just digital currency to become a programmable platform for decentralized applications (dApps). While Ether (ETH) is its native cryptocurrency used to pay for transaction fees ("gas"), Ethereum's true power lies in its support for "smart contracts." These are self-executing agreements with the terms directly coded into the blockchain, automatically running as programmed without the need for intermediaries, censorship, or fraud. This smart contract functionality has made Ethereum the foundational backbone for a vast array of Web 3 innovations, including the majority of DeFi protocols and NFTs, establishing it as the leading decentralized computing platform, albeit one that also grapples with its own scaling challenges on its main network.
The primary programming language used for writing smart contracts on Ethereum is Solidity. Solidity is a high-level, contract-oriented programming language designed specifically for implementing smart contracts on the Ethereum Virtual Machine (EVM), as well as other EVM-compatible blockchains. It was proposed by Gavin Wood, one of Ethereum's co-founders, in 2014 and developed by the Ethereum project's Solidity team. Its syntax is similar to JavaScript, C++, and Python, making it somewhat familiar to many existing web developers, but it's specifically adapted to the unique requirements of blockchain and smart contracts, focusing on security and verifiability.
In the Web 3 ecosystem, "wallets" don't literally store cryptocurrencies or NFTs, but rather securely manage the private cryptographic keys that prove ownership of these digital assets on the blockchain. There are two primary types of wallets: hardware (hard) and software (soft). Hardware wallets, like Trezor, are physical devices that store private keys offline, making them the most secure option for large holdings as they are immune to online hacks, malware, and phishing. Transactions are signed on the device itself, with the private key never touching the internet. This allows for robust self-custody of one’s own crypto assets. No need for a bank. Conversely, software wallets, such as MetaMask or Trust Wallet, are applications that run on computers, phones, or as browser extensions, providing convenient online access to assets. While easy to use for frequent transactions and dApp interactions, they are inherently less secure than hardware wallets due to their constant internet connection, making them more susceptible to online threats.
DeFi, or Decentralized Finance, refers to a rapidly growing ecosystem of financial applications built on blockchain technology, predominantly Ethereum, that aim to replicate traditional financial services in a trustless, transparent, and permissionless manner. At its core, DeFi eliminates the need for central intermediaries like banks or brokers, with smart contracts automatically executing financial agreements. This allows anyone with an internet connection to access services such as lending and borrowing (e.g., Aave, Compound), decentralized exchanges (DEXs) for trading cryptocurrencies directly (e.g., Uniswap), and the creation of stablecoins that maintain a pegged value. DeFi represents a paradigm shift towards a more open, accessible, and censorship-resistant global financial system where users retain greater control over their assets
NFTs, or Non-Fungible Tokens, are unique digital assets recorded on a blockchain that verify ownership of a specific item, whether digital or physical. Unlike cryptocurrencies, which are "fungible" (meaning any unit is interchangeable with another), each NFT possesses a unique identifier and metadata, making it one-of-a-kind and irreplaceable. The blockchain provides an immutable and public record of ownership, establishing verifiable authenticity and provenance for the asset it represents. While initially gaining prominence through digital art and collectibles, NFTs are increasingly being adopted across various sectors, including gaming (in-game items), music (ownership of tracks), ticketing, and even representing fractional ownership of real-world assets, transforming how value, ownership, and scarcity are digitally managed.
To overcome the scalability limitations (slow transaction speeds and high fees) of foundational Layer 1 (L1) blockchains like Ethereum, Layer 2 (L2) scaling solutions have been developed. These are protocols built on top of the L1 chain that process transactions off-chain, bundling them efficiently and then periodically settling the compressed data back onto the main L1. Examples include Rollups (Optimistic and ZK-Rollups), which significantly increase transaction throughput and reduce costs by batching numerous transactions into a single L1 transaction. Building even further on this concept are Layer 3 (L3) solutions, which are largely still an emerging and experimental area. L3s are envisioned as specialized networks built on top of L2s, designed to provide even greater scalability, highly customized functionalities, or application-specific optimizations that wouldn't be feasible on lower layers. They could serve as interconnected networks for specific dApps or to link various L2s, paving the way for a truly massive scale for Web 3 applications.
Why does Web 3 eliminate the need for Black banks?
Web 3's promise lies in its ability to dismantle traditional gatekeepers. Theoretically anyone with internet access and a crypto wallet can engage in lending, borrowing, and trading without needing approval from a central authority. Smart contracts automate these financial agreements, minimizing human intervention and, in theory, removing the potential for racial bias in lending decisions. Furthermore, the inherent transparency of public blockchains, where all transactions are verifiable, could make it significantly harder for fraudulent activities or mismanagement of funds to occur unnoticed, fostering a level of trust that has historically been betrayed within the Black community.
By offering direct access to capital and various wealth-building tools, from lending pools to fractionalized asset ownership via NFTs, Web3 could empower communities to navigate financial markets and fund ventures independently. This circumvents many of the discriminatory barriers of traditional finance. The lower infrastructure and regulatory burden (compared to operating traditional banks) could also foster a more equitable playing field.
What is the black talent pool in Web 3?
It’s impossible to get a specific figure but there’s a few important data points to keep in mind. In general, ~5% of software engineers in the U.S. are black. The Solidity Developer Survey 2024 Results surveyed 684 developers from 91 different countries. The highest number of respondents hail from the USA (10.8%), followed by Nigeria and India at 7.8% each. This remains consistent with the 2023 insights, except for Nigeria gaining ground to share 2nd place alongside India this year. See below for a full breakdown for the 2024 Solidity Developer Survey.
This all suggests that there’s a solid talent pool to start with, but more work needs to be done.
Sovereign Individual
The Sovereign Individual: Mastering the Transition to the Information Age, was published in 1997 by James Dale Davidson and Lord William Rees-Mogg. The book's core thesis revolves around the idea that the Information Age will fundamentally shift power from nation-states to individuals, leading to the rise of the "sovereign individual" who is liberated by technology and global mobility.
The authors predicted that new technologies would enable individuals to bypass the traditional monopolies of nation-states over the issuance and regulation of money. They foresaw a future where "mathematical algorithms that have no physical existence" would transcend the importance of central banks and governments in controlling global wealth. This cybermoney, controlled by private markets, would supersede the fiat money issued by governments, thereby significantly reducing the state's ability to tax and control its citizens' wealth.
This mobility, facilitated by digital currency, would allow individuals to "shop around" for jurisdictions with favorable tax regimes and less governmental interference, fundamentally altering the relationship between the individual and the state. The authors envisioned the rapid expansion of the internet, not just as a static catalog of information but as a dynamic "cybereconomy." They predicted a transition through stages, from simply an information medium to a realm where complex transactions and even entire businesses operate outside national jurisdictions. This "electronic everywhereness" would create new virtual communities and economies, where physical location becomes increasingly irrelevant. They foresaw that commerce would shift from local dialects to the new global language of the internet, emphasizing communication and information flow.
While not using the exact terms "AI" or "automation" as we do today, the book discussed how advanced technology would lead to the weakening of traditional jobs. They predicted that "cognitive skills will be rewarded as never before," and that individuals with the ability to "invent their own work and fully reap their productivity rewards" would flourish. This implies a future where repetitive or less skilled labor would be increasingly handled by machines or advanced programs, elevating the importance of intellectual capital and individual ingenuity. The authors foresaw a future where many jobs would become "tasks that you do, not a thing that you have".
Dymnd’s Optimism
Everything points towards a bright future for communities who adopt Web 3 technology. The Dymnd team will be expanding its outreach to organizations that are developing the next generation of Web 3 talent. We believe that supporting this talent with its career prep will cause positive ripple effects.
For the Dymnd marketplace, two updates will be coming when the time is right. 1) we will entertain the use of cryptocurrency on the Dymnd marketplace. 2) we will add high quality web 3 vendors & businesses on the marketplace in the wealth section. The future is here. Adapt or die.